Monday, 4 December 2017

Trade Real Bitcoins not Derivatives

margin trading is using leverage, that is increasing bad response to emotions (in case of manual trading), amplify the impact of execution errors (also in case of automated trading); and also encourages you to take unnecessary risks;

since you will invest with money borrowed from your broker, you do not have ownership over the investment (that is you cannot withdraw the bitcoins to your other wallet); the broker may close your positions for several reasons (a fork is coming, elections, bullshit, etc) and you cannot disagree with them - you will have no choice;

a margin-call will liquidate all your positions in case of a flash-crash, you will be forced to sell to avoid margin calls.

usually the contract size for derivatives is an integer, so you can trade 1, 2, 3 BTC for example, while if you own real bitcoins you can trade 0.01 BTC without any problems.

the commissions for a classical brokerage firm is way larger than ones on real exchanges